BCA says 2035 emissions target requires at least $210b capital investment
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The news: The Business Council of Australia has released modelling that suggests the soon-to-be decided 2035 emissions reduction target would cost at least $210 billion if set at a rate consistent with ongoing efforts, but could cost upwards of $530 billion for a more ambitious target.
The emission reduction scenarios capture the period between 2022 and 2035.
The numbers: If the federal government sets the 2035 emissions reduction target at 50% of 2005 level, the net transition investment cost could be between $210 billion and $300 billion, according to the McKinsey modelling commissioned by the BCA.
The BCA report states that a 50% reduction target assumes “Australia’s emission reduction efforts are maintained from a 29% reduction in 2022 and passing through a 43% reduction in 2030”, requiring all existing policy measures and commitments to be fully implemented as announced.
Other accelerated scenarios that involve an increase in emissions reduction efforts were also measured. A 60% reduction target could cost between $395 billion and $480 billion while a more than 70% target could cost between $435 billion and $530 billion.
The BCA also flagged that a shift from the 50% emissions reduction target to a 60% target would require an additional 59,000 workers in electrical trades and engineering alone by 2030.
The context: The federal government is due to make a decision on a 2035 emissions reduction target by mid-September.
Before then, the Climate Change Authority will make a recommendation for a target. It has been consulting on targets be between 65% and 75%.
A separate group of more than 500 Australian businesses, including Atlassian, Canva and Fortescue, are backing a 75% emissions reduction target on 2005 levels for 2035. That coalition had commissioned modelling from Deloitte Access Economics.
What they said: “Ambitious but achievable targets with the right policies to deliver them are key to Australia’s longterm competitiveness and prosperity,” Business Council chief executive Bran Black said.
“This report is about making sure Australia has clarity on the steps it must take if it is to announce an ambitious but achievable 2035 target.”
The sources: BCA media release, BCA report
